European stocks hit new highs as coronavirus fears recede

Edmund Heaphy
Finance and news reporter
European stocks, which hit new record highs on Tuesday, look set for further gains on Wednesday. Photo: Eric Piermont/AFP via Getty Images

European stocks climbed further on Wednesday after closing at fresh record highs in the previous trading session, as waning fears about the impact of the coronavirus continued to boost global markets.

The pan-European STOXX 600 index (^STOXX), which tracks the continent’s top 600 listed companies, was up by more than 0.4% on Wednesday morning, notching a new record peak.

The FTSE 100 (^FTSE) index, meanwhile, was up by more than 0.2% in London. Germany’s DAX (^GDAXI) surged by 0.7%, while France’s CAC 40 (^FCHI) was up by 0.4%.

The gains in Europe followed a strong trading session in Asia. The Hang Seng (^HSI) closed almost 0.9% in the green. Japan’s Nikkei (^N225) rose by almost 0.7% on Wednesday.

“US and European equities made a series of fresh record highs yesterday and the positive mood seems to be carrying forward into Wednesday,” said Neil Wilson, the chief markets analyst at Markets.com.

Markets were buoyed by comments from the International Monetary Fund that noted that China had ample room to introduce stimulus measures if the country’s economy slows further due to the coronavirus outbreak.

The jump in stocks came even as global ratings agency S&P Global warned on Wednesday that the slowdown in the Chinese economy would shave as much as 0.2 percentage points off eurozone and UK economic growth in 2020.

The shock to the European economy, of which China is a significant export market, is likely to be felt in the first quarter, S&P Global said.

“A large share of economic activity hindered by the outbreak of the virus, especially goods production, would just be postponed rather than cancelled altogether,” it noted.

“The prospect of stimulus and receding fears over the coronavirus combined to drive the Stoxx 600, DAX, Dow and S&P 500 to new all-time highs,” said Wilson.

European markets are “enjoying the tailwinds from a slowdown in new coronavirus cases, whilst a weaker euro is also helping out,” he noted.

While the death toll from the coronavirus epidemic continues to climb, Chinese authorities said on Wednesday that the rate of infection was slowing.

Some 97 people died in the past 24 hours, while just over 2,000 cases emerged, the lowest in a single day since the end of January.

“The number of new coronavirus cases in mainland China fell to its lowest since January. There’s been a change in how cases are recorded so we should be cautious about taking Chinese claims at face value,” warned Wilson.

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